This blog is about the Law of Unintended Consequences.
It will report on occurrences of the Law of Unintended Consequence and also of Murphy's Law and other inconsequential matters.
I hope that my readers will add their stories that illustrate these, and similar, laws.
One of the most clear examples of this law in operation is "How the war in Iraq strengthened America's enemies" - Peter W Galbraith.

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Wednesday, October 24, 2012

China may have encouraged its citizens to protest against perceived Japanese incursions into Chinese maritme territory. These protests resulted in burnt Japanese car showrooms in China nd other acts of violence. The unintended consequence may be a speeding up of Japanese investment away from China to more peaceful and increasingly less costly countries.

"Almost a quarter of Japanese manufacturers are rethinking their investment plans in Chinaand some may shift future production elsewhere after the spike in tensions between Asia's two largest economies."The sentiments were expressed in a Reuters Corporate Survey released on Wednesday and in interviews conducted in recent weeks with executives in industries ranging from electronics to apparel manufacturing.

The concerns suggest the recent rift between China and Japan over disputed islands in the East China Sea could mark the end of a boom that has played out over two decades in which Japanese companies have emerged as the most active source of outside direct investment in China after Hong Kong and Taiwan.

Since 1990, Japanese companies led by electronics makers like Panasonic Corp (6752.T) and followed by a wave of automakers like Nissan Motor Corp (7201.T) and Toyota Motor Corp (7203.T) and their suppliers have poured almost $1 trillion into Chinese factories, Japanese government statistics show.

The investment by over 20,000 firms created over 1.6 million jobs as Japanese companies looked to take advantage of low production costs and then China's potential as a surging market for everything from cars to cosmetics.

Now, sentiment has turned. When asked if their attitude toward using China as a production hub over the medium term had changed, 37 percent of Japanese companies surveyed said they had grown more cautious.

Almost half of Japanese manufacturers said they expected to see lower sales in the current fiscal year. In response to a separate question, 24 percent said they were considering delaying or reducing planned investment in China. Eighteen percent said they were considering shifting production to other countries.

The survey allowed companies responding to pick more than one choice to describe the impact of the China dispute on their business, meaning there could be some overlap between the group of manufacturers considering cutting investment and those looking to other markets outside China as future production hubs.

"China is very convenient, but gradually that convenience has been fading," Yoshihisa Ejiri, 65, president of clothing chain Honeys Co (2792.T) told Reuters.

The Reuters survey of 400 Japanese companies took place between October 1 and October 17. A month earlier, almost 60 percent of firms in a Reuters survey said they expected little to no fallout from the strains with China. Companies were not asked if they were considering delaying or reducing planned investment in China in that poll.

"The level of the anti-Japan demonstrations was different this time and I think that will make it harder for companies that have been successful in China to continue operating there," said Hisayoshi Hashimoto, a professor at Japan's National Graduate Institute for Policy Studies."

Monday, October 8, 2012

According to this article, the affirmative action that India applies to uplift the 'outcasts' through reserved places for university entrance and civil service posts is helping to perpetuate its continuation amongst the majority of Indians who have largely forgotten what caste they belong to.From - http://www.nytimes.com/2012/10/08/world/asia/indias-rich-benefit-from-schools-affirmative-action.html?ref=asia - "The two women both claim that affirmative action cost them coveted spots at elite public universities. Both cases have now reached the Supreme Court: one in the US and the other in India.

¶One of the women, Abigail Fisher, 22, who is white, says she was denied admission to the University of Texas based on her race, and on Wednesday, the United States Supreme Court is to hear her plea in what may be the year’s most important decision. The other woman is from the southern Indian state of Tamil Nadu, and two weeks ago the Indian Supreme Court ordered that she be admitted to medical school pending the outcome of a broader court review.

¶“When I came to know that I could not get into any medical college, I was really shocked,” C. V. Gayathri, the Indian student, said in an interview. “I didn’t speak to anyone for a week. I cried. I was very depressed.”

¶Though the outlines of the two cases are similar, differences between how the world’s two largest democracies have chosen to redress centuries of past discrimination are striking. While affirmative action in the United States is now threatened, the program in India is a vast system of political patronage that increasingly works to reward the powerful rather than uplift those in need.

¶Indeed, the caste-based affirmative action here raises questions, not only for India and the United States, but also for nations like Brazil and Malaysia that have adopted similar anti-discrimination programs. Without diligent judicial oversight, experts say, the efforts can help perpetuate inequality rather than redress it.

¶In Tamil Nadu, for instance, 69 percent of university admissions are now set aside for what the state has determined to be “backward castes.” Many of those favored with these set-asides have controlled Tamil Nadu’s government and much of its resources for generations, but they claim special status by pointing to a caste survey done in 1931. (Ms. Gayathri, 17, is a Brahmin whose parents are civil servants with modest incomes.)

¶Five prominent university officials in Tamil Nadu said in interviews that those given set-asides at their institutions were generally the children of doctors, lawyers and high-level bureaucrats. The result is that rich students routinely get preference over more accomplished poor ones who do not happen to belong to the favored castes. None of the officials would allow their names to be used for fear of angering the government ministers who benefit politically and personally from the program.

¶India’s caste system was created nearly 1,500 years ago to organize occupations in a feudal agricultural society. Those at the bottom of the system, now known as Dalits, were forbidden in some places from even allowing their shadows to fall on those at the top, known as Brahmins. Most castes were deemed “backward,” which meant that they were consigned to menial jobs.

¶Over the last 30 years, however, India’s economy has been transformed, much of its populace has moved from villages to sprawling cities, and once distinct castes have been scrambled. That has led to the erosion of historic differences in education and increased income mobility within castes in India, recent studies have found.

¶“Caste is no longer an economic restriction,” said Viktoria Hnatkovska, an assistant professor of economics at the University of British Columbia, and a co-author of several studies on the changing role of caste in India.

¶Nonetheless, quotas have transformed the taint of “backwardness” into a coveted designation.

¶The Gujjars of Rajasthan, for instance, held violent riots two years ago to protest the government’s refusal to declare them as “most backward.” Politicians win elections in India by promising to bestow this one-time curse, which has led to a dramatic expansion in those considered backward decades after the designation had true economic meaning.

¶Indeed, caste awareness among the young is sustained in part because of set-asides, so a program intended to eliminate the caste system is now blamed by many for sustaining it.".

Tuesday, October 2, 2012

Isn't it ironic that companies world-wide are hoarding cash because they fear that the recession will be with us much longer; but the very act of hoarding $4 trillion cash instead of spending it in employment, expansion, acquisitions is causing the unintended consequence of prolonging the recession?If a mere layman like me can see that, why can't the smart captains of industry and commerce?You wonder.From - http://www.thetimes.co.uk/tto/business/industries/banking/article3555319.ece#tab-5 -

Storm-tossed economic seas have prompted company directors worldwide to pick up their shovels, head for shore and bury their bulging business cashpiles.

Risk-averse boardrooms are hoarding about $4 trillion while they wait for the clouds to break, according to a study of the world’s top 500 non-financial businesses by the law firm Hogan Lovells.

Misery in Europe, a slowdown in the pace of Chinese growth and only a tepid recovery in the United States have contributed to a culture of corporate inaction. Hogan Lovells found low activity both in dealmaking and in distributing cash to shareholders.

“It’s tempting to see this as encouraging because you feel, sooner or later, that something’s going to need to be done with all this money,” Andrew Pearson, a corporate partner at Hogan Lovells, said.

American companies top the hoarders’ league, having set aside $1.8 billion, citing political uncertainty before next month’s presidential election as their biggest reason for inaction. German businesses have amassed $259 billion, while French companies have put aside $228 billion as the eurozone crisis rages. Britain’s top companies have $147 billion of cash on their balance sheets — almost as much money as the NHS’s annual budget.